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The Nov. 15, 2003 North American launch of the PlayStation 4 will be the first time a Sony (NYSE: SNE ) (NYSE: SNE ) (NYSE: SNE ) console has not debuted first in Japan (the new system is slated for an early 2014 launch in Japan). On the other hand, Sony's recently-unveiled PS Vita TV will hit Japanese stores on Nov. 14, 2013 and not make it to North America until sometime in 2014.
Perhaps even more so than in the West, the Japanese gaming industry exists in a state of transition. What does Sony's release timetable for its PlayStation platforms say about the industry and the direction it is heading?
Sins of the father
The PlayStation 3, overseen by the father of PlayStation, Ken Kutaragi, got off to a slow start. The system featured highly complex and specialized architecture that impeded early development efforts on the system. Its CELL processor required that software be coded to the unique specifications of the machine in order to achieve optimal results. As such, the majority of multiplatform software released in its lifecycle performed better on the Xbox 360.
This helped Microsoft (NASDAQ: MSFT ) to establish its system as the preferred HD choice for gamers in North America. The PS3's complex architecture also created problems for Sony in Japan. Most Japanese publishers were ill-equipped to handle the transition into HD development, and the difficult to develop for PS3 only made matters worse. The system launched with a high-price point, leading to slow sales, until the issue could be remedied, and encouraging the Japanese gaming public to continue their focus on handheld devices.
An eye for design
The PlayStation 4 is Sony's first home console to be primarily designed by a Western team. The project was spearheaded by industry veteran Mark Cerny, who fought for the console's adoption of developer-friendly X86 hardware and looks to have done a commendable job in shaping the product for success.
Cerny recently stated the reason the PlayStation 4 would not launch in Japan until 2014 is a lack of software that appeals to the Japanese consumer base. The idea of a PlayStation console launching without games that speak to the Japanese populace would seem to border on absurdity, but the industry has changed.
Most Japanese publishers currently exist in a state of weakness. Flashback to the mid-90s when gaming was dominated by the island nation, with Western developers and publishers trying to establish their position in the market. On the strength of popular media imports like Pokémon and Dragon Ball Z, the Japanese anime aesthetic was becoming increasingly popular on Western shores, and it seemed unthinkable that there would come a time when the Japanese did not shape the gaming industry.
Companies like Squaresoft, prior to its merger with then-rival Enix, achieved tremendous success on the PlayStation and the PlayStation 2 and began plotting ill-fated media expansions that involved costly CGI films. Almost across the board, Japanese publishers failed to prepare for the HD era.
Some, like Nintendo (NASDAQOTH: NTDOY ) (NASDAQOTH: NTDOY ) (NASDAQOTH: NTDOY ) , are still having trouble with the switch. Heading into the latest console cycle, the Japanese industry is in disarray, and its assets seem like a little more than an afterthought.
Japanese publishers simply did not position themselves for the rising costs and demands of the console gaming market. They are failing to create software that has appeal outside of niche markets. Game series like Final Fantasy, Metal Gear Solid, and Resident Evil once spearheaded the push to make gaming a more immersive and emotionally-driven experience. Each of these series has lost relevance in recent years, trying to incorporate elements of Western design and often losing aspects of their appeal brand identity in the process.
As Western development has come to define the console space, Japanese efforts have become focused on handheld gaming and the mobile market. Companies like Capcom, Konami, Namco, and Square Enix are now positioning themselves for futures that look largely dependent on mobile and F2P models because they lack the resources for large-scale development. For example, Capcom, a name once synonymous with quality and some of the biggest franchises in gaming, has an approximate $152 million in cash. That's about 2 to 3 failed AAA releases away from being broke.
What does this mean for other platform holders?
Microsoft seems to have given up on Japan as a viable territory. After devoting substantial resources to bringing exclusive Japanese-developed content to its Xbox 360, there exists no comparable effort for the Xbox One. The system's media center features are geared toward a Western audience, and the device does not need to achieve good Japanese traction to be a success for Microsoft.
Meanwhile, Nintendo's Wii U has proven to be a non-starter in the territory. Nintendo-published titles like Pikmin 3 and The Wonderful 101 have failed to jump-start the system, with the latter being a major sales disaster. Nintendo will continue to receive Japanese support for its 3DS handheld even if publishers are spurning the Wii U, though markedly less than it saw with the original DS handheld. As a publisher, Nintendo is still strong, but its handling of HD development and the Wii U are troubling for the future.
With Microsoft writing off Japan and the Wii U a resounding dud, it is not surprising that Sony chose to delay the home territory launch of the PlayStation 4. By focusing on its PS Vita and PS Vita TV, the company has the chance to appeal to the current Japanese market and ready the right software to make its new device more appealing. The state of Japanese game development makes Sony's ecosystem and release strategy a sensible one, but it is also worrying for the state of the industry at large.